BILL ANALYSIS


HB 1503
By:  Yarbrough
April 7, 1995
Committee Report (unamended)


BACKGROUND

The City of Houston Municipal Employees' Pension System is governed
by Article 6243 (g), V.T.C.S. This article applies at present only
to the City of Houston. The Pension System is governed by a Board
of Directors (Pension Board). The Board and the System are charged
with administering a two-track pension system, referred to in the
statute as Group A and Group B. The Board has sole responsibility
for its actions as set out in §§ 5 (a) and (h) and § 20 of Article
6243(g) at present.

PURPOSE

This bill tightens and clarifies language regarding the
responsibilities of the Board in governing the System, resolves any
potential conflict in statutory language, and increases the Board
members' responsibility for their actions. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1:  Amends Chapter 358, Article 6243g, V.T.C.S., by adding
Sections 3A and 3B as follows:

     Sec. 3A. (a)  Describes who is eligible to participate in
Pension System and make election to become Group A or Group B
member.  Prescribes submission of a signed notarized form to become
a Group A member and contribute a portion of salary to the Pension
Fund per this Act.  Describes Group B member which makes no
contributions to Pension Fund.  

     (b)  Establishes a date certain for the beginning of elections
under this section.

     Sec. 3B. (a)  Provides that each member whether an employee or
elected official of a city shall make a one-time irrevocable
election on a date determined by the Pension Board.  Provides for
system beneficiaries to retain their membership in Group A or Group
B.  Refunds of contributions by Group A members moving into Group
B are made without interest.  Stipulates that membership changes
from Group B to Group A, must comply with Subsection (b).

     (b)  Provides that payments By Group B members opting into
Group A are required to be made with interest at the legal rate.

     (c)  Requires Pension Board to prepare and distribute a
brochure to explain the election and benefit alternatives. Provide
adequate information for an informed choice. Designate one or more
to provide additional information.

     (d)  Prescribes form to be used for the election and must be
notarized. Includes a form indicating the member has read and
understands the election process. 

     (e)  Election cannot be before January 1, 1996.

SECTION 2: Amends Sections 5 (a) and (h), Chapter 358, Article
6243g. V.T.C.S., as follows:

     5(a)  Grants Pension Board the right to receive, handle,
control, manage, and disburse Pension Funds for the respective
city.

     5(h)  Grants Pension Board the authority to adopt for
administration purposes written rules and guidelines consistent
with this Act.  Provides for Pension Board to administer this Act
for the benefit of all members.  Requires Pension Board to
establish and maintain all records for proper administration.

SECTION 3:  Deletes obsolete language in Section 6, Chapter 358,
Article 6243g, V.T.C.S.

SECTION 4:  Amends Section 23(b), Chapter 358, Article 6243g,
V.T.C.S., by authorizing the equalization of non-contributory Group
B pension options by revamping the retirement age by service credit
on a sliding scale to more equitably reflect the relationship
between service, age and benefits.

SECTION 5:  Amends Chapter 358, Article 6243g, V.T.C.S., by adding
Section 31A, which grants the system and its beneficiaries wider
latitude in the payment of lump sum valued benefits when, for
example, a beneficiary requires such payment for catastrophic
medical bills.

SECTION 6:  Repeals Section 23 (d) and 24 (b), Chapter 358, Article
6243g, V.T.C.S.

SECTION 7:  Effective date

SECTION 8:  Emergency clause


SUMMARY OF COMMITTEE ACTION

HB 1503 was considered by the committee in a public hearing on held
on April 3, 1995.

Rep. Ken Yarbrough testified as the bill's author.

The following person testified for the bill:
     Jack Ogg representing the Houston Municipal Employees Pension
System

The bill was reported favorably without amendment with the
recommendation that it do pass and be printed and sent to the
Committee on Local & Consent Calendars by a record vote of 5 ayes,
0 nays, 0 pnv & 4 absent.




Pensions & Investments Committee